Debate Over Broadband Open Access Heats Up
 
December 1, 1999
 
Eric Fishman - New York

In recent months, a vigorous debate has emerged in Washington and several states over whether owners of high-speed, broadband communications networks, and cable operators in particular, should be required to make their facilities available to potential competitors. Locked in this dispute are two opposing camps: local phone companies, Internet Service Providers (ISPs), consumer advocacy groups, and various local governments who favor so-called "open access," and cable operators and their own ISP affiliates, who are opposed. The outcome of this debate hinges on the different regulatory frameworks which currently govern broadband technologies, and will ultimately affect the fates of companies involved in the development and deployment of broadband services.

Background: What Are Broadband Services?

Broadband communications services allow consumers to access the Internet and Internet-related services at speeds significantly higher than traditional narrowband modems. Currently, most Americans use the Internet at speeds of less than 56 kbps. Broadband technology allows users to access the Internet at speeds from 50 to several hundred times faster. This increased speed enables consumers to obtain a wide range of enhanced services, including real-time video, advanced forms of electronic commerce, and increased prospects for at-home learning and telecommuting.

Given its enormous capabilities, demand for broadband capacity has exploded over the past decade. By year's end, analysts project that approximately 2 million Americans will have access to broadband technology. By 2008, that number is predicted to reach 78 million.

Delivery Platforms

Broadly, there are three alternative technologies or platforms which broadband providers utilize. Each of these technologies, however, is subject to a different regulatory regime, with different rules governing the issue of access.

Telephone Broadband - Digital Subscriber Lines (xDSL)

The broadband technology which traditional telephone companies offer their customers is Digital Subscriber Line (DSL) service - sometimes referred to as xDSL because of the variety of DSL technologies. DSL technology upgrades the performance of the standard twisted copper wire pair connecting most homes and businesses to carry high capacity data transmission. The technology expands the amount of frequency used over the copper line, whereby the line's higher frequencies are used to transmit the data and the lower frequencies are free to transmit voice or fax transmissions. Thus, DSL is able to function on a line simultaneously with standard voice and fax services and avoids the installation of a new separate line. Because the technology works over the existing telephone plant, DSL is significantly less expensive to deploy on a wide scale than other approaches, such as new fiber or cable construction. With DSL, the average analog connection speed of 56.6 kbps can be increased to 1.5 Mbps or higher.

Regulatory Framework. Title II of the Communications Act of 1934, as amended, requires all telephone companies to interconnect with the facilities and equipment of other carriers, and to furnish service on reasonable terms and conditions. The Act also forbids local exchange carriers from restricting the resale of telecommunications services, and requires LECs to afford non-discriminatory access to poles, ducts, conduits and rights of way to competing carriers. Incumbent LECs have the additional duties of interconnection, unbundled access to network elements, resale, and collocation. Failure to comply with these requirements could subject a telephone company to substantial enforcement actions.

Wireless Broadband

In the near future, several fixed wireless and satellite carriers will be offering local broadband access also using their existing microwave networks to transmit high speed Internet services. Because they avoid the high costs and delays associated with laying fiber or upgrading their cable networks, fixed wireless companies can enter the market quickly and deliver broadband services at relatively low costs. However, this technology also presents a number of deployment challenges, most notably, the line-of-sight requirements between the transmitter and receiving antenna.

With their unlimited coverage area, satellite systems will also soon offer broadband access to virtually any part of the United States, and may be the best method for serving remote regions and locations where telecommunications infrastructures are of low quality or are non-existent. Several satellite providers, including Teledesic and Skybridge, are constructing systems and plan to start offering two-way broadband satellite services by 2001.

Regulatory Framework. Most fixed wireless carriers and some satellite operators that intend to offer broadband services operate as common carriers and are generally subject to the interconnection, nondiscrimination provisions of Title II of the Act. Such carriers will be required to offer capacity on their systems to potential competitors at reasonable rates. A number of wireless providers, however, operate as non-common, or private, radio carriers. Under applicable FCC precedent, such companies will be free to discriminate among customers and refuse to provide access to their networks.

Cable Broadband

Cable industry architecture is in the middle of a transformation from closed cable systems that feature one-way delivery of analog television signals to two-way interactive broadband systems, involving a hybrid of traditional coaxial and modern fiber optic technologies. These new networks enable the cable industry to deliver a wide range of services, including digital television, Internet access, and telephony. With hybrid technologies, cable operators can offer more than 100 analog video channels, hundreds of digital video channels, as well as capacity for Internet, telephony and other services. With respect to Internet access, upgraded cable systems can carry data up to several 100 times faster than transmission using dial-up modems over ordinary telephone lines, and 100 times faster than ISDN telephone lines.

Regulatory Framework. Under present law, cable operators are not classified as common carriers, and are not subject to the common carrier provisions of Title II of the Act. The FCC also has extended this exemption to common carriers such as AT&T in connection with their operation of cable systems. Currently pending before the Commission is a Petition for Declaratory Ruling filed by two ISPs - Internet Ventures and Internet On-Ramp - asking the Commission to issue a ruling that ISPs are entitled to commercial leased access on cable systems under Section 612 of the Communications Act, governing cable operators. At least informally, however, the FCC has concluded that no other federal law obligates cable operators to provide competitors with access to their networks, and has indicated that such decisions should be left to the marketplace.

Frustrated by the FCC's views on this subject, ISPs and other parties seeking cable access have sought redress on the local level, in courts, and in Congress. Several local franchising authorities, that have the power to grant cable franchises and approve the transfers of cable franchises in their localities, have begun to require cable companies to "open up" or provide "open access" to their broadband platforms for competing ISPs as a condition for the approval of franchise transfers. In December 1998, the City of Portland and Multnomah County, Oregon adopted the country's first mandatory access provision in the wake of the AT&T/TCI merger. When AT&T rejected this requirement, the City and County stated that AT&T's refusal resulted in a denial of its request for a change in control of the TCI franchises. AT&T sued the City and County, alleging that the denial of the franchise transfer was unlawful, and in June of this year the Federal District Court ruled in favor of the City and County. AT&T has appealed the court's decision, and oral arguments were held in November.

More recently, in July of this year, the Broward County, Florida, Board of County Commissioners voted four to three to adopt a general ordinance requiring cable operators to provide unaffiliated ISPs with nondiscriminatory access to the cable companies' broadband facilities. Both AT&T and Comcast Corporation have appealed this decision. In September, the Fairfax City Council of Fairfax, Virginia, voted four to two to require Cox Cable to provide access to its high-speed Internet platform to nonaffiliated ISPs. This requirement was a condition of approval of the transfer of the Media General franchise to Cox. And in October, the City of Cambridge, Massachusetts, advised AT&T that it would have to give competitors non-discriminatory access before the city would approve the company's acquisition of its cable franchise from MediaOne.

Local actions on this issue have favored cable operators as well. In July, the San Francisco Board of Supervisors approved the transfer of control of TCI to AT&T without mandating nondiscriminatory access. The Board did, however, establish a city policy supporting nondiscriminatory access to broadband services, and directed the City Attorney to take steps to implement that policy. More recently, in October, the Miami-Dade (Florida) Commission rejected by a 10-2 vote an ordinance that would have required cable companies providing high-speed Internet to give equal access to all Internet service providers.

Likewise, although Congress has not acted on the broadband issue, there are several bills pending in the U.S. House of Representatives and in the U.S. Senate which address the cable access question.

Conclusion

As demand for broadband service escalates, the debate over "open access" is likely to continue, on both the federal and state levels. Demand for cable access will be especially intense, given its superior performance. With the FCC for the time being taking a "hands-off" stance, the battle will be waged in the courts and legislatures, and on the local level. At this juncture, no uniform solution to this critical issue is in sight.